[jnsaver]

Do you think there is a huge difference between going with hype (Buy Gold! Invest in Technology! Jump on the housing bandwagon! Buy Yen! Store crude oil in your garage!) and using basic principles to critically analyse the costs and benefits of various courses of action? I think there's a big difference between someone like Warren Buffet and RK Rich Dad. RK has nothing to offer but hype and false optimism, but if we only knew half of what Warren Buffet knows we might be able to get somewhere.

The principles that you mentioned: wide diversification and cost-dollar averaging are both based on the principle of "regression to the mean." Essentially, there are random highs and random lows, but, on average (over the long run) things follow a stable predictable path. If you diversify, you'll get both the highs and the lows, but you'll grow at a predictable rate. If you cost dollar average, you'll buy both highs and lows, but on average you'll get a fair price. This is why in the long run predictable, hands off savers come out ahead and passive diversified investors tend to win the game. Old news, right? It's kind of like taking a true/false test and answering everything "false" without reading any questions. You're going to be right atleast half the time if correct answers are evenly distributed.

However, there are a few statistical principles missing from current discussions of personal finance: the role of multicolinearity, kurtosis and skew of the growth distribution and the role of outlier stocks in creating growth. If there was a way to understand these things, we might be having a very different discussion.